02376cam a22002897 4500001000700000003000500007005001700012008004100029100002000070245012100090260006600211490004200277500001900319520106000338530006101398538007201459538003601531690011601567690008901683690008501772700001401857700002101871710004201892830007701934856003802011856003702049w16565NBER20161209214328.0161209s2010 mau||||fs|||| 000 0 eng d1 aChamon, Marcos.10aIncome Uncertainty and Household Savings in Chinah[electronic resource] /cMarcos Chamon, Kai Liu, Eswar S. Prasad. aCambridge, Mass.bNational Bureau of Economic Researchc2010.1 aNBER working paper seriesvno. w16565 aDecember 2010.3 aChina's household saving rate has increased markedly since the mid-1990s and the age-savings profile has become U-shaped during the 2000s. We find that rising income uncertainty and pension reforms help explain both of these phenomena. Using a panel of Chinese households covering the period 1989-2006, we document that strong average income growth has been accompanied by a substantial increase in income uncertainty. Interestingly, the permanent variance of household income remains stable while it is the transitory variance that rises sharply. A calibration of a buffer-stock savings model indicates that rising savings rates among younger households are consistent with rising income uncertainty and higher saving rates among older households are consistent with a decline in the pension replacement ratio for those retiring after 1997. We conclude that rising income uncertainty and pension reforms can account for over half of the increase in the urban household savings rate in China since the mid-1990s as well as the U-shaped age-saving profile. aHardcopy version available to institutional subscribers. aSystem requirements: Adobe [Acrobat] Reader required for PDF files. aMode of access: World Wide Web. 7aD91 - Intertemporal Household Choice • Life Cycle Models and Saving2Journal of Economic Literature class. 7aE21 - Consumption • Saving • Wealth2Journal of Economic Literature class. 7aJ3 - Wages, Compensation, and Labor Costs2Journal of Economic Literature class.1 aLiu, Kai.1 aPrasad, Eswar S.2 aNational Bureau of Economic Research. 0aWorking Paper Series (National Bureau of Economic Research)vno. w16565.4 uhttp://www.nber.org/papers/w1656541uhttp://dx.doi.org/10.3386/w16565